FASB takes next small step towards improved standards for private company financial reporting

FASB’s parent organization, the Financial Accounting Foundation (FAF) has been indicating a desire to ramp up standard settings for private company financial reporting, supported by the release earlier this year of a report sponsored by FAF, the AICPA and the National Association of State Boards of Accountancy.

The news Friday is that FAF intends to form a working group on this subject; this new group is supposed to issue an action plan by the end of 2011 on whether (or how) to devise rules that differ from public companies reporting requirements.

An FAF release said "it will conduct outreach to stakeholders through roundtable meetings, surveys and meetings with advisory and constituent groups and others."

It's interesting to contemplate some of the areas where private company reporting would benefit from different standards--shareholder conflicts, family members on payroll, financial conditions of major shareholders, estate and wealth transfer agreements in place.   These would certainly help document issues that influence private company values, as would many others.   Somehow, it seems unlikely that this is the sort of change FAF will endorse...